Last weekend, as Rachel Reeves traveled to China to drum up business for Britain, Conservative MP Tom Tugendhat wrote that Taiwan would be a better economic partner. Since there were only 2,500 words in The Times, he decided not to mention the following facts. Taiwan's annual output value is US$800 billion. China’s is $19 trillion. Tugendhat is a good guy who also proves how far a pukka accent and background can carry an empty ship in the inert sea of British public life, and he's not alone. Many Conservatives want Britain to distance itself from China. There is a security reason for doing this. But why dress it up as economics? Why not admit that growth is not that important to them?
The problem in the UK is that almost everyone sees growth as a priority, but few actually deliver on it. There is always another priority, whether it is geopolitical, ecological, cultural or egalitarian. The result is the worst in the world: no serious push for economic success, but also no national acquiescence that we should settle for a life of low-drama stagnation. Both options are adults' choices and have their own advantages and costs. It is this fudge – the abstract idea that economic growth is desirable but without concrete form – that has left Britain in a gelatinous grip.
A thousand newspaper editorials will tell you that Britain lacks a "growth strategy". If this means policy, then Britain has no shortage of such, and almost never has. What is missing is perhaps more accurately called a "growth bias": the established view that when growth conflicts with another goal, growth must prevail.
Let me talk about this from another angle. What has been the U.S. growth strategy over the past few decades? Under which government was it published? Can someone send me a link? Whenever I pose these questions to "strategy" mongers, the best answer I get is some vague bravado about DARPA's role. Ultimately, the most successful economies fail to have a plan. In addition to its advantages such as shale oil, it also has a strong preference for growth. When economic growth meets another imperative—tax cuts versus income equality, corporate expansion versus antitrust concerns, fracking versus local sensitivities—the U.S. bias is toward growth, at least compared with the Western European average . A culture that does not expect statutory paid leave can make dynamic choices that the UK cannot or will not make.
This week Sir Keir Starmer set out a plan to use artificial intelligence to enrich the UK. When he said he would make artificial intelligence “work for everyone,” he clearly didn’t mean it. Almost no government reform worth mentioning works for everyone. His line all but admits that once AI disrupts an interest group, he is likely to cave.
If AI is only half as transformative as the hype suggests, it will mean job losses in the public sector: in the diagnostic phase of healthcare, for example. Unions want the economy to grow. But not that much. AI also has huge energy needs. Even at current electricity consumption levels, the government's target of decarbonizing the grid by 2030 remains at the outer limits of achievability. These goals may have to be pushed back to meet new data center demands. Sensible environmentalists want economic growth. But not that much.
If the UK aims to attract the best AI talent, it may have to cut high income or capital gains taxes. Once Starmer got close to the idea, think tanks like the Resolution Foundation used charts and graphs to persuade him to surrender to the impact on inequality. Given the choice between a social democracy with annual growth of 1.5% or a more stratified country with annual growth of 3%, some would choose the first. They want growth. But no. . .
There is another way. Britain can stop chasing excuses for growth. I'm going to hate it, but there's no shame in it if politicians can come to the following intellectual solution. The strong growth rates before 2007 were an anomaly, not the weak growth rates since. A return to this trend is feasible, but required reforms such as unemployment benefits would lead to social disharmony that should be offset by the supposed growth. At the end of the day, Britain is not America. This is France: a "rich-poor country" whose vast capital and flair for STEM subjects hides many cracks. Ideal? No, but what model? Economic success has not stopped America from having the worst politics in the free world.
Or the UK could continue to play the current game. The Conservatives want growth, but not if that means building stuff, aligning with Europe or engaging heavily with China. Labor wants growth, but not if it causes trouble for the unions, or "leaves people behind", or some such empty phrase from NGO press releases. So what is left for growth policy? A finance minister has asked her colleagues to come up with some suggestions for cutting red tape. It would be foolish to even talk about firing Reeves. Yes, she chose to learn the hard way what has always been simple: calling spending an “investment” does not deceive real investors; For a country that has not run a fiscal surplus since the millennium, "austerity" is not an issue. But Britain does not have a Reeves problem. It has a British problem. Deep down, we're happy with 1.5% annual growth, but we're afraid to show it.
janan.ganesh@ft.com